Minister of Finance and Coordinating Minister for the Economy, Dr. (Mrs) Ngozi Okonjo-Iweala has disclosed that the federal government will set up a fund to pay off some of the nation’s N5.3 trillion domestic debt stock from 2013 fiscal year, with the aim of gradually reducing the huge domestic debt burden. She said this in Lagos, Monday at a consultative forum on Budget 2013 for private sector operators and civil society organisations.
She also said that the total wage bill of the federal government of Nigeria has risen to N1.6 trillion due to the implementation of the new minimum wage, while 39 per cent of capital expenditure for fiscal 2012 has so far been implemented.
Responding to concerns about the nation’s rising debt profile, she said that, “It is indeed true that our debt ratio is alright and sustainable at this moment. That is why the rating agencies upgraded Nigeria when they were downgrading everyone else. Our debt-GDP ratio, if you just take federal debt, it is about 17 per cent-both domestic and foreign. If you add what we have from the states, we could get up to 21 per cent as opposed to a standard of 25 to 30 per cent which we have set for the country.
“Now, we have to worry about the debt service to revenue. But even if we are okay internationally, we have to look at the composition. It is true that domestic debt is worrying. I have said that before. Our problem is not external debt; our external debt is very low, two per cent of GDP. But we really need to slowdown the rate of borrowing domestically. The interest rate at which the federal government and states are raising debt at the moment is too high. We are raising debt at 15 per cent because we need the money to finance our expenditure and finance capital.
